UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A1
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (Fee Required)
For the fiscal year ended May 31, 1998.
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
Commission File Number: 1-4676
The Bethlehem Corporation
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(Name of small business issuer in its charter)
Pennsylvania 24-0525900
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25th and Lennox Streets, Easton, Pennsylvania 18044-0348
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number including Area Code: (610) 258-7111.
Securities registered under Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, no par value American Stock Exchange, Inc.
Securities registered under Section 12(g) of the Exchange Act: None.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to the filing requirements for the past 90 days. Yes X. No .
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $16,271,000
As of August 18, 1998, 2,288,520 shares of the registrant's Common Stock were
outstanding and the aggregate market value of such Common Stock held by
non-affiliates was approximately $1,802,210 based on the average of the bid and
asked prices on that date of $1.75.
<PAGE>
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
compliance with Section 16(a) of the Exchange Act.
The directors are elected at the Annual Meeting of the Stockholders of
the Company and each director elected holds office until his successor is
elected and qualified. The Board currently consists of eight members. The
stockholders vote at the Annual Meeting for the election of directors. There are
no family relationships among any directors or executive officers of the
Company, except that directors Jan P. Gale and Ronald H. Gale are brothers.
The names of the directors, together with certain information regarding
them, are as follows:
<TABLE>
<CAPTION>
Year First Became a
Name Age Principal Occupation Director
- ----------------------- ------------ --------------------------------------------------------- ----------------------
<S> <C> <C> <C>
Salvatore J. Zizza 52 Chairman of the Board of Directors since 1995; Chairman 1995
and Principal of Hallmark Electrical Supplies Corp.,
since May of 1998; from 1991 to April 1998, Chairman
and Executive Vice President and Treasurer of The
Lehigh Group, a public company listed on the New York
Stock Exchange with subsidiaries in the distribution of
electrical products
Alan H. Silverstein 49 President and Chief Executive Officer of the Company 1994
since December 1995; President and Chief Operating
Officer of the Company from February 1994 to November
1995; from July 1992 to February 1994, President of
Universal Industrial Gas, Inc., a rebuilder of
industrial gas plants
James L. Leuthe 56 Chairman of the Board of First Lehigh Corporation, a 1976
bank holding company, since 1982;
from 1977 until 1995 held various
positions with the Company,
including most recently President
and Chief Executive Officer
Jan P. Gale(1) 44 Vice President since 1978 of UPE, an international 1991
supplier of complete process plants and equipment and
manufacturer of new equipment in the United States and
Europe
Ronald H. Gale(1) 47 President and Chief Executive Officer of UPE since 1978 1990
Harold Bogatz 60 Vice President and General Counsel of UPE since 1987; 1995
Secretary of the Company since 1996
James F. Lomma 52 President, J.F. Lomma Inc. since 1975, a trucking, 1998
rigging and export packaging firm located in South
Kearney, N.J. Mr. Lomma also serves as the Chairman of
the Special Carrier & Rigging Association
B. Ord Houston 85 Secretary of the Company from June 1983 to December 1976
1995, otherwise retired for at least
the last five years; held various
positions with the Company from 1966
until 1984, most recently as
Executive Vice President
</TABLE>
(1) Jan P. Gale and Ronald H. Gale are brothers.
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<PAGE>
Item 10. Executive Compensation
The following table summarizes compensation information for the
Company's President and Chief Executive Officer, and two executive officers of
the Company whose compensation exceeded $100,000 for the Fiscal Year ended May
31, 1998. The table presents for such individuals information with respect to
compensation paid or accrued by the Company for services rendered during the
Fiscal Years ended May 31, 1996, 1997 and 1998. Messrs. Silverstein, Lind and
Mrs. Martin are collectively referred to herein as the "Named Executive
Officers."
<TABLE>
<CAPTION>
Summary Compensation Table
Fiscal Year Compensation Long Term Compensation
------------------------ ----------------------
Name and Principal Other Annual Stock All Other
Position Year Salary Bonus Compensation (3) Option Compensation (1)
Awards
- ------------------------ -------- ------------ ------------- ---------------------- ------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Silverstein 1998 $ 154,789 $ 91,214 $ 6,607 50,000 $11,865
President and Chief 1997 140,441 83,570 7,295 - 11,925
Executive Officer (2) 1996 118,655 46,850 7,295 - 11,925
Clarence T. Lind 1998 104,923 21,303 5,849 - 612
Vice President of 1997 99,000 25,907 4,369 - 672
Sales, Marketing and 1996 90,000 26,350 4,369 20,000 672
Technology (4)
Antoinette L. Martin 1998 100,000 10,900 5,539 10,000 612
Vice President of 1997 89,038 890 5,902 - 612
Finance, Chief 1996 63,754 638 5,902 20,000 612
Financial Officer (5)
</TABLE>
(1) Represents life insurance premiums paid by the Company.
(2) Mr. Silverstein was elected President and Chief Operating Officer of the
Company in February 1994 and was appointed Chief Executive Officer of the
Company on December 12, 1995.
(3) Represents lease and insurance payments made by the Company with respect to
use of an automobile.
(4) Mr. Lind was elected Vice President of Sales, Marketing and Technology of
the Company on December 12, 1995.
(5) Mrs. Martin was elected Vice President of Finance and Chief Financial
Officer of the Company on September 12, 1995.
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<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information concerning options granted
during the fiscal year ended May 31, 1998 under the Company's stock option plans
or pursuant to grants to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options Granted
Underlying Options to Employees in Per Share Expiration
Name Granted Fiscal Year Exercise Price Date
- ------------------------- -------------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Alan H. Silverstein 50,000 5.8% $1.88 June 2, 2007
Antoinette L. Martin 10,000 1.17% $1.88 June 2, 2007
</TABLE>
Aggregated Fiscal Year-End Options
The following table sets forth certain information regarding
unexercised stock options held by each of the Named Executive Officers as of May
31, 1998. No stock options were exercised by any Named Executive Officer during
the 1998 Fiscal Year.
<TABLE>
<CAPTION>
AGGREGATED FISCAL YEAR-END OPTION VALUES
Number of
Unexercised Options Value of Unexercised
at May 31, 1998 in-the-Money Options at May 31, 1998 ($)(1)
----------------------------- ------------------------------------------------
Exercisable/
Name Exercisable/Unexercisable Unexercisable
- ---- ------------------------- -------------
<S> <C> <C>
Alan H. Silverstein 310,000/0 439,625/0
Clarence T. Lind 9,999/10,001 3,932/4,768
Antoinette L. Martin 23,333/6,667 10,066/3,734
</TABLE>
(1) On May 31, 1998 the last reported sale price of the Common Stock, as
reported by the American Stock Exchange, was $2.56 per share.
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<PAGE>
Compensation of Directors
Directors are not compensated in general for their services as a
director but are entitled to reimbursement of expenses incurred in connection
with their attendance at meetings. In the past the Company has granted options
to certain directors.
Employment Agreements
Alan H. Silverstein, President and Chief Executive Officer, is employed
by the Company pursuant to an agreement (the "Employment Agreement") dated
February 1, 1994. The Employment Agreement provides for a five year term, with
automatic renewal for successive terms of two years, subject to a mutual right,
exercisable within 120 days prior to the expiration of any term, not to renew
the Employment Agreement. The salary paid to Mr. Silverstein for the first year
under the Employment Agreement is $110,000 increasing to $165,000 in the fifth
year. Mr. Silverstein is entitled to a quarterly bonus based on the defined
earnings of the Company.
5
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of September 28, 1998, information
regarding ownership of the outstanding Common Stock of the Company by (i) all
persons who are known to the Company to be the beneficial owner of more than 5%
of the Common Stock; (ii) each director and Named Executive Officer (as such
term is hereinafter defined); and (iii) all directors and executive officers of
the Company as a group:
<TABLE>
<CAPTION>
Percentage of
Name and Address of Beneficial Owner* Shares Owned Beneficially (1) Outstanding Shares
- --------------------------------------------- --------------------------------- ----------------------
<S> <C> <C>
Universal Process Equipment, Inc. 2,706,600(2)(3) 63.5%
PO Box 338
Roosevelt, NJ 08555
Ronald H. Gale 2,779,100(4)(5) 65.2%
Jan P. Gale 2,777,100(4)(5) 65.1%
James L. Leuthe 339,124(4)(6) 14.0%
Alan H. Silverstein 310,000(7) 11.9%
Salvatore J. Zizza 188,000(8) 7.6%
B. Ord Houston 6,365(4) (9)
Harold Bogatz 10,000(10) (9)
James F. Lomma - (9)
Clarence T. Lind 13,999(11) (9)
All directors and executive officers as a 3,767,921(12) 76%
group (12 persons)
</TABLE>
* Unless otherwise noted the address of the Beneficial Owner is c/o the Company,
25th & Lennox Streets, Easton, Pennsylvania 18044.
(1) All persons identified as holding options are deemed to be beneficial
owners of shares of Common Stock subject to such options by reason of their
right to acquire such shares within 60 days after September 28, 1998.
(2) Includes 1,975,000 shares subject to options. See "Certain Relationships
and Transactions."
(3) Does not include shares owned by Ronald H. Gale and Jan P. Gale.
(4) Includes 500 shares subject to options.
(5) Includes 2,706,600 shares beneficially owned by UPE, of which the
individual is an officer, director and principal stockholder.
(6) Of this total, 52,281 shares are owned by Nikki, Inc., a corporation of
which Mr. Leuthe is an officer and director and the sole stockholder,
161,343 shares are owned by Mr. Leuthe and 125,500 shares are subject to
options. This total does not include 640 shares owned by Mr. Leuthe's adult
children as to which he disclaims beneficial ownership.
6
<PAGE>
(7) Consists of 310,000 shares subject to options.
(8) Consists of 188,000 shares subject to options.
(9) Less than 1.0%.
(10) Consists of 10,000 shares subject to options.
(11) Includes 9,999 shares subject to options.
(12) Includes 2,657,999 shares subject to options.
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<PAGE>
Item 12. Certain Relationships and Transactions
Ronald H. Gale and Jan P. Gale are Directors and Stockholders of the
Company and are officers, directors and principal stockholders of UPE, a
principal stockholder of the Company. UPE and/or Ronald H. Gale and/or Jan P.
Gale are also majority stockholders or otherwise affiliated with other companies
that engage in transactions with the Company. UPE and related entities have
purchased process equipment manufactured by the Company and have utilized the
Company's remanufacturing services. The approximate total revenues derived from
sales to UPE and related parties was approximately $1,318,000 for the Fiscal
year ended May 31, 1998 ("Fiscal 1998").
On March 26, 1996, the Board of Directors of the Company, subject to
the approval of the Company's stockholders, granted an option to UPE to purchase
350,000 shares of the Common Stock at an exercise price of $1.8125 per share.
Such option was issued in consideration for debt guarantees by UPE for various
borrowings by the Company. This transaction was approved by the Company's
Stockholders at the Annual Meeting of the Stockholders held on April 23, 1998. A
financing charge of $296,000 related to these options was recognized in Fiscal
1998. The value ascribed to these options is approximately $424,000, and the
balance of $128,000 will be amortized over the terms of the outstanding
guarantees.
On March 26, 1996, the Board of Directors, subject to the approval of
the Company's stockholders, authorized the issuance to UPE of 350,000 shares of
Common Stock in consideration for a 50% ownership interest in certain resale
inventory, which consists primarily of heat transfer equipment owned by UPE.
This transaction was approved by the Company's Stockholders at the Annual
Meeting of Stockholders held on April 23, 1998. The Company recorded
approximately $126,000 of non-cash compensation expense related to this
transaction in Fiscal 1998.
On August 21, 1998, the Board of Directors of the Company authorized
the issuance to UPE of 175,000 shares of Common Stock at an exercise price of
$1.63, which represented the fair market value of the stock at the date of the
grant. Such option was issued in consideration for guarantees by UPE of
borrowings by the Company from PNC Bank National Association. The financing
consists of a $4 million line of credit and term loan, secured by the Company's
inventory, accounts receivable, machinery and equipment and other assets. The
value ascribed to such options will be amortized over the term of the guarantee.
In May 1998, the Company transferred inventory with a book value of
approximately $1,924,000 to UPE. As part of this transaction, UPE assumed
obligations of $1,390,000 and $534,000 of related bank debt. This transaction
did not result in a gain or loss in the Company's Fiscal 1998 statement of
income.
From time to time in the ordinary course of business, UPE advances
funds to the Company to enable the Company to meet certain temporary cash
requirements. The interest on the advances is prime rate (Chase Bank, New York)
plus 1%. In August 1996, UPE advanced $250,000 to the Company. UPE advanced an
additional $250,000 to the Company in October 1996. As of September 23, 1998,
$538,000 of these advances remains outstanding.
On February 28, 1997, the Company purchased a complete two stage
environmental thermal process system in Alberta, Canada. In order to effect the
acquisition of the equipment, the Company borrowed $225,000 from UPE at an
interest rate of prime rate (Chase Bank, New York) plus 2.5%. This loan was
repaid in full during the third and fourth quarter of Fiscal 1998.
As of June 1, 1996, the Company began a three year profit sharing
arrangement with UPE. This arrangement was agreed upon as consideration for
UPE's role in introducing the Company to Third Millenium Products, Inc.
("Millenium"), assisting in negotiating the acquisition of the assets of the
American Furnace Division of Millenium by Bethlehem Advanced Materials
Corporation ("BAM"), a wholly-owned subsidiary of the Company, and UPE's role in
originating, negotiating, developing and assisting in the marketing of the Tower
Filter Process product line. Under this arrangement, which expires in May 1999,
UPE is entitled to receive 25% of the defined pre-tax profits of BAM and the
Tower Filter Press product line. For the Fiscal Year 1998, no provision for this
profit sharing arrangement was required.
The Company and Salvatore J. Zizza, Chairman of the Board of the
Company, are parties to an agreement under which Mr. Zizza renders certain
financial advisory services, including those relating to proposed mergers
8
<PAGE>
and acquisitions and equity and debt financing and relations with the financial
community and investors. Mr. Zizza receives compensation in the amount of
$120,000 per annum.
On March 26, 1996, the Board of Directors, subject to the approval of
the Company's Stockholders, authorized the issuance of 125,000 and 178,000
shares of Common Stock to James L. Leuthe, a director and former Chairman and
Chief Executive officer of the Company, and Salvatore J. Zizza, Chairman of the
Board of Directors of the Company, respectively. On April 23, 1998, this
transaction was approved at the Company's Stockholder's meeting. During Fiscal
1998, the Company recorded approximately $32,000 in compensation expense for
these options. The balance of the option's fair value of approximately $335,000
will be expensed as services are rendered over the three year vesting period of
the options.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE BETHLEHEM CORPORATION
Dated: September 28, 1998
By: /s/ Alan H. Silverstein
-----------------------
Alan H. Silverstein
President and Chief
Executive Officer
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